Peso Korner

Peso Korner

Wednesday, September 17, 2014

Is it worth keeping your money in a savings account?



P3,000,000 that's what you need to maintain in your savings just to earn an interest of  P500 a month (net of tax).  P600,000 for just a mere P100 interest a month (net of tax). Disappointing, right? Well ,nobody gets rich investing in savings accounts.

The average Savings Account interest rate of reputable banks in the Philippines is only 0.25% per annum. Not much right? So for sure you will ask, so what is the purpose maintaining a Savings account?  Let me just give you  just 3:

1) for your emergency fund - you need this fund accessible to you anytime (in case of accidents, unbudgeted repairs for your home or car, hospitalization of any family members, etc.) So define just how much emergency fund do you really need to maintain.

2) for your budgeted expenditures for the month - you may need to wait for the bills to come within the month before you pay but of course you need to set aside a budget for it so just keep it in your savings account then pay your bills before the due date.

3) for your surplus - this is the excess between your net income for the month less your budgeted expenditures,  include your savings in your budget in #2, this is the fund you set aside to attain your financial goals like the house and lot you want, your car or your travel fund. You may allot specific amount for each like say P200/month for your travel fund, P500 for your house and lot,  etc. This surplus of yours, you can spend it however you want or you can accumulate it for further investment later on.

Other than the 3 mentioned above, keep your money somewhere else, help it grow for you!

The purpose of this post is to open your eyes to the realization that you may be investing your "savings" the wrong way. I pasted the following for illustrative purposes:

Eloading is one of my sidelines so I used it as an example. With just P110 capital in a cellphone eloading business,  if you can load at least P110 a day you can earn P500 in a month, and that's just for retailers! So just imagine the difference of raising P3,000,000 and P110 just to earn P500 a month! The potential if you will look outside the box, is limitless!

If you will keep all your savings in a Savings Account, your net  earning is actually not even enough to cover for inflation. So kabayan, do your research and make sure to invest your money wisely and not let it sleep in your savings account. There are a lot of deposit accounts you can open that will generate better interest than your savings account like Time Deposits which earns  a year interest in savings account in just 1 month (0.25% per month). You can try UITF too or Mutual Funds. Minimum holding period for those is only 1 month. Initial investment is at least P5,000. I will post more about these investment options next!


Think "big" everyone!! We can do this! Till my next post! Ciao!
   

7 comments:

  1. Napakahirap kumita ng pera ngayon. Ako, I have 2 jobs (1 full time and the other is part time) plus may business pa kami ni hubby, pero grabe, ang hirap pa din makapag save up lalo na sa dami ng gastos everyday... And tama ka, those 3 things are the sole purpose of opening an account, plus, okay syang financial document if you want to get a loan or something.

    ReplyDelete
  2. Think nowadays, of the lifestyle to survive, need to be financially stable for everything. I think, we have to "back to basic lifestyle" wherein, use only the necessary things and refrain from releasing money without thinking about it.

    ReplyDelete
  3. In today's fast life if we need to rule we must work really harder else you'll just get destroyed.

    ReplyDelete
  4. Eloading sideline can really help you earn. For security na lang talaga banks ngayon.

    ReplyDelete
  5. The key to earning is investing, right! Thanks to you financial tips.

    ReplyDelete
  6. Thanks for the financial tip. After all; earning well and investing goes hand in hand :D

    ReplyDelete
  7. Very informative post. I will keep an eye on your post about mutual fund and UITF. =)

    ReplyDelete